Why market isn’t working for us

When we founded this farm, and especially when we decided to go full-time, we assumed we would be production-limited. That is, our main challenge would be growing enough product to meet demand and make the income we needed. We figured that with good quality, good marketing, and organic status, our products would be popular and in demand in a generally educated, liberal college town with a large farmers market and many locally-oriented restaurants.

We were wrong. This year especially, we aren’t coming close to selling what we grow, and that’s a real problem. After a decent spring, our market sales have gone down significantly compared to last year. We’ve also had some crop failures or disappointments, but even judging just by what we actually bring to market, sales are well below production. I ran some numbers from last week’s market (we keep clear records on exactly what we bring to, and from, market) and the data bear this out. The table below uses numbers from all the perishable items we brought to market (everything but garlic and onions), in other words everything fresh we need to sell that day or it’s lost income. The first column shows the product’s value as a percentage of the total value on the stand; the second column shows the percentage of that item that actually sold. The products are in order of lowest total value on the stand to highest. I’ve intentionally left out the actual product names; the point is the overall pattern.

%value %sold

1      100
3        78
4        83
4      100
6      100
9        96
9        59
10      27
12      33
12    100
13      33
17      66

Overall, we only sold 68% of the total potential value on the stand last weekend. While we can often sell out of small specialty items, we are not making the larger-scale sales needed to really bring in income. We can’t make a living selling just niche products like garlic, herbs, and edamame; we need the regular sales of tomatoes, squash, cucumbers and the like, but customers are choosing not to buy those items from us in meaningful quantities. Running these numbers confirmed what I’d been instinctively seeing all summer: we’re bringing home a lot of very high quality produce, while overall earning less than last year. That doesn’t work for us. So what’s going on?

First, here’s what I think we’ve done right over the past few years:

Good marketing. We have a good web presence, with a website that draws many compliments and a reasonably well-read blog that provides useful and timely information, including cooking ideas and advice. We’ve been featured in most Columbia-area publications, sometimes more than once, and have been written up in many local food blogs. We’re still one of the few area farms with a decent online presence. We’ve held multiple on-farm events targeted at our core audience, including open houses, multiple on-farm meals for the local Slow Food chapter, and other events. We’ve also cooperated with Slow Food in doing many events at area schools. We have a clean, attractive farm stand with clear branding that we receive compliments on every week. We’ve presented ourselves, accurately I think, as good examples of the kind of farmers consumers say they want to support: ethical, organic, foodie-minded, hard-working, full-time, environmentally aware, professional, etc. We refuse to mess with Facebook and Twitter, but given that virtually no other farm in the area does those things either, I can eliminate that as a core problem. I can’t see what more we could reasonably do to present our story, our message, and our products to the intended customer audience.

Good quality. I know our products are as good as you can get around here. I know it because we have extremely high personal standards for food, and we eat mostly our own products. I know it because some of the best chefs in town, like Mike Odette and Trey Quinlan, tell us our products are excellent and continue to buy what they can from us. I know it because we go out of our way to grow, and market, really fresh items. We never sell fresh produce more than a few days old (other than cured/dried items), keep multiple storage areas at different temperatures to ensure proper storage conditions, handle things carefully, cool produce quickly, keep backstock in insulated coolers at market rather than piling it in the open, minimize sun exposure on produce at market, and so on.

Good philosophy. People say they want organic. Survey after survey, media story after media story, the growing demand is for organic. We’re as organic as it gets; we stay away from all sorts of inputs and methods that are technically allowed but not as philosophically organic as customers think. We live the ethics we propound; generating little waste, emphasizing environmentalism and conservation, growing our own food, going out of our way to support other local farmers and businesses, etc.  We are who we say we are, and we are who the general consumer base says they want to buy from.

What’s wrong? So why aren’t our products more popular? Why do most market customers not buy from us at all? Why do those who do, tend to buy $5-$10 at most?

Price. I can only see one place where our farm does not match up with others in the pantheon of consumer desires, and that’s price. We’re expensive compared to most stands at market, though I’d argue we’re pretty competitive with most organic produce in area grocery stores, especially when relative freshness and quality is taken into account. And our market prices match up well with the other few certified farms at market; we’re not out of line relative to our niche.We’re often more expensive than wholesale organic, but that’s hardly surprising since much of the industrial organic system is built on cheap migrant labor and subsidized desert irrigation, just like its conventional counterpart. We can make sales of items other market stands don’t have, like diverse garlic and edamame, but not anything for which we have competition, like squash, cucumbers, or tomatoes. That tells me it’s a price issue, because the quality is good and the quantity is there.

When you walk down the aisle at the farmers market, we look expensive because we’re directly competing largely with part-time farms which, even when well-meaning and well-run, have off-farm and/or retirement incomes and otherwise aren’t treating their business the way we treat ours, as a full-time long-term profession and not a source of cash on the side. It’s not hard to make a profit selling produce (especially if you don’t account for the value of your labor), but it’s awfully hard to make a real living. Our prices have to include insurance, retirement savings, health costs, long-term rolling averages of inevitable crop failures, home repairs, etc…all things that people with jobs or outside incomes just don’t need to think about earning from produce. I think I can count the number of real full-time professional farms at our market on one hand (there are over 70 overall), though I suspect most customers don’t realize that, and some of those farms have to make sales in big-city markets like St. Louis to stay in business, despite our market location in a city of 100,000. It’s like trying to run a professional auto repair shop with five neighbors doing quickie $10 oil changes in their garages because they like working on cars in their spare time.

Customer spending. In no way do I intend to demean the many loyal and interested customers we do have. But the reality is, there just aren’t enough of you, and the per capita spending just doesn’t work for a full-time farm. I wish I had time to keep data on every transaction amount at market, but I’d confidently say that our median purchase is less than $10, with a long tail toward $2-$4 and only a couple people who spend more than $20. If you figure a professional market farm has to earn at least $1000 per market (gross) to even have a chance (30 markets x $1,000 = $30,000 gross income, still not very much), then that’s roughly $4/minute in sales for a 4-hour market. Business isn’t anywhere close to that, either in quantity (lots of customers) or magnitude (significant single purchases).

According to 2009 USDA numbers, the average weekly grocery bill for a 2-person household could range from $80 to near $160. Assuming we’re targeting the middle-upper range of that spectrum, our normal market sale of around $10 is anywhere from 6%-8% of the total weekly grocery budget of an average market customer (even at the low end, it’s only 12%). Given that the USDA thinks vegetables should be 25% or more of any given meal, that’s a big gap in potential spending, and that’s really hurting us. Either people aren’t eating many vegetables, or they’re not buying them from us despite being theoretically/statistically able to do so. Granted, we don’t grow everything people could want, but we have a lot more diversity than most customers choose to purchase from us.

Using the $1,000 threshold mentioned above, even at $4/customer we only need 250 customers per Saturday to buy from us, out of the 3,000-4,000+ customers the market estimates attend every week. Our internal numbers tell me we’re getting far less than that; I think we’re more in the 70-100 range. That tells me that a farm like ours simply is not of interest to most market customers, even though it’s theoretically supposed to be. People vote with their wallets, and we’re not getting elected (note that I wrote about concerns with market last year, too).

Recession. This is the easy out, simply accepting that we’re in a bad economic time and lots of businesses and individuals are hurting, and people are cutting back and looking for cheaper options. Overall, it’s true. But what I’d like to know is, are people cutting back the same everywhere? Our sales this summer are down roughly 30% from last year (still not a great year). Is the same true for cell phone and electronic sales? Jewelry? Clothes? Cable/satellite TV? Tobacco? Will the Mizzou football stadium be 1/3 empty this year, with people refusing to pay huge markups for generic food and beer? If all of that is true, then fine, the recession is really here. If not, I’m curious why our food is high on the list of early budget cuts when other things apparently are not. Even with tightened belts, there are enough people in Columbia and/or enough coming to market to make even $5-$10 individual sales worth it, if the total purchasing activity was there at our stand (which it isn’t; see above). Virtually anyone can afford $4-$5 at a weekly farmers market, if they chose to spend it with us; that’s just not happening.

Going CSA. The situation described above is one, among many, reasons we’ve decided to change our business model to a CSA next year. While we still have to do the work to find and retain customers, going CSA gives us access to the entire area population instead of the small niche of market-goers. It guarantees an end home for what we grow, and lets us focus our work, skill, and stress on production, not marketing. It removes individual product prices as a factor in consumer behavior, replacing it with an annual return on investment that will be easier for them to judge and value. Long-term we still have to manage the farm well enough to grow enough product to support enough customers to make a good living, and that’s an ongoing learning experience, but it takes most of the uncertainty and inefficiency out of the sales end of things.  And so CSA, we think, is a far more sensible business choice for us than the farmers market, with its increasing uncertainty, cost, and inefficiency, has become.

14 thoughts on “Why market isn’t working for us

  1. Another factor that may be at work: the growth of gardening in general. We have much more from the garden than we can eat, so our market shopping is limited to things we don't/can't grow, large quantities for canning, and processed foods (like cheese, trout and meat). That puts the squeeze on small self-sufficient farmers like yourselves, I'm afraid. I do sympathize and hope the CSA works out.

  2. Hi Eric, I'm writing a paper for my Sustainable Ag class on the subject of "farm crisis". Would you be interesting in answering a few questions and giving your perspective on that phrase and what it means for you and your operation? If so here's my email amy.sirk@gmail.com

  3. Eric, as one of your customers, I can only answer for myself and my own habits of attending the Columbia Farmer's Market as well as my opinions on buyers as a whole.You would think that for most of us, getting truly high quality food to eat (versus cheap crap we can buy in a store) would be an absolute top priority. But it is not. And while I personally try to buy local and from the market all I can, I still get the majority of my food from the supermarket, some in the organic section and some not. Part is cost-driven, part convenience (since of course the Market is not open every day at all hours when I need something). For whatever reason, valid or not, I do not think of the Market as a place to buy my weekly staples (and I think I am in the majority in this view.) Rather, I think of the market as a place to "indulge" in "special" foods, like great tomatoes, wonderful seasonal fruit, herbs, etc. And for a lot of people, that begins to put going to the Farmer's Market squarely in the box of "luxury indulgence." Because compared to regular grocery food, prices are higher. And many people are going to make decisions based on price, even if they do have the discretionary income to not worry about it (I do not have the discretionary income, so am forced to buy only a few things from the Market when I would prefer to buy many).I do think the recession has quite a bit to do with the problem. People choose what they want to spend money on. And for way too many, a football season ticket is worth more than good, wholesome, local-source food. I'd rather have the food, but when the market is seen as a "luxury," people are more easily able to decide not to go.The question is whether if the market and vendors substantially lowered their prices, would volume make up the difference? I have no clue, but I suspect not enough. This year particularly I've seen a lot of vendors with lots and lots of food, and with the exception of the never-ending peach line, not very many people buying.And you already know I'm interested in your CSA if you decide to offer smaller baskets. 🙂

  4. Thank you for all the useful comments. Editing this down to a remotely reasonable length meant leaving out a lot of factors and discussion, and some of that is coming through here. Frank, I've had growing numbers of people say things like "oh, it looks so good but I grow that already". I think this is great, I'm all for DYI, but I wonder whether gardening is a higher "threat" to CSA? Even a gardener can come to market to buy the few things they don't grow or which failed that year, but most people with gardens won't also want the full-service of a CSA and there's no in-between.Professor, I can say from my behind-the-scenes conversations with other vendors that we're not the only ones feeling this way. I'm sure there are also people doing very well who would scoff at our concerns, but it's a wide spread of opinion and experience, and part of our point is there isn't enough business for everyone who wants it, and it’s easier for full-timers to be squeezed. No one should have to go 3 hours to St Louis to make a living farming 12 miles from 100,000 people. I definitely think supply is outstripping demand right now. More and more idealistic young people (like us) are trying this business, while the recession in rural areas is pushing other "normal" folks to try produce growing as a way to earn some money when there are no other jobs. I'm seeing it in restaurant sales, too, where there are more and more people calling the few chefs who really work with local farmers, trying to move product, while their own business is slow. Ironically enough, the saturation of media coverage on the local foods boom may be backfiring, as it inspires everyone to jump on board just as consumers cut back on their spending and we potentially hit a glass ceiling of local-foods consumers.

  5. Robin, I think you too are accurate in your general description consumers, including yourself. One of the things that really leapt out at me from doing these numbers was that we don't necessarily need the stereotypical "upper middle class foodie" spending $40/day, because there are more than enough people coming to market with $5 purchases to keep us going if we actually got that business. Sure, it's easier and more efficient to sell more in larger transactions, and there are plenty of people with sufficient food/beverage budgets to buy lots of produce, but that isn't needed in the way one might think. So while I'd love to see more people treating markets or CSAs as their primary grocery stop, customers like yourself are fine if enough of you chose us even at a few dollars a day.On the question of low-price/high-volume, consider that the more produce you have to grow to make the same amount of money, the more risk you're taking on. A farm that has to be two or three times our size to achieve the same effective income is risking far more in terms of input costs, labor costs, weather/natural impacts on all those crops, and so on. I'm not sure that all the "bulk" farms out there are really accounting for that; certainly my feeling is that there is only a tenuous correlation between the size of a farmstand at market, and the nature of the business on the spectrum from hobby to full-time. It's possible to grow a lot of cheap stuff if you're absorbing the associated risk through an off-farm job or other source of income (like subsidized corn acreage in addition to produce).At its core, this wasn't really an editorial, more a statement of fact and experience as we've seen it this year (I'm not trying to guilt-trip anyone). There are many different conclusions that can be drawn; ours is that 30% unsold produce is unsustainable for whatever reason it's happening, and confirms that we need a different business model. Which we're more than ready to try next year, though given the long lead time of farming, we still need to finish selling the products we've been working to grow this year, and that means we'll be at market for a while yet.And we'll be working on details/setup of CSA all winter, so we'll let you know what we come up with, and will be trying to work with interested customers to see what's of most interest. Just have to get through this season first. Thanks for the interest.

  6. Thanks, Eric. Most of the produce items at Market are commodities – peppers, tomatoes, etc. On the other hand, vendors of specialty items – your edamame, Merrit and Dennis' trout, Goatsbeard cheese, and so on – represent unique niches that should have a higher margin. Could you offer a "Specialty CSA" that featured specialty items (edamame, garlics, braided onions and what not) on which there would be a bigger profit margin and wouldn't be replicated by us DYI-ers? Just speculating. Cheers.

  7. Frank,Good question.Specialty items like garlic and edamame potentially have a higher margin (though we'd raise our edamame price if we were to remain at market next year), though we also set our prices in part to allow all products to have a profit margin. We shouldn't be expected to sell anything at a loss; no one expects any other retail business to do that. The basic problem is there isn't enough overall demand for specialty items, or agricultural ability to grow enough of them, to make a living on them alone. We have to be able to sell "commodities", too.For example, this year I've been selling 70-80 heads of garlic a week. Last year that was up to 120-150 a week. At an average price of $2/head, that's at most $300 in gross income, which is nowhere near enough at the farm scale. It's good within its niche, but I can't sell any more garlic than that at market, so there's no point in increasing production for that outlet (and we're certainly noticing the decreased income on garlic compared to last year).Things like edamame we could sell more than we currently produce, but edamame has two constraints. One, it's a royal pain to harvest properly, and a significant increase in production would mean we'd have to hire workers to help us manage it, effectively neutering the extra sales. Two, it's a legume, and we can only have so many legumes in our crop rotation before we end up over-planting them and causing ourselves other problems. Increasing edamame would force a decrease in peas and green beans, which have the benefit of being grown in other times of the year and under different conditions, thus spreading our risk and workload out over time rather than concentrating it all one one crop. If the only legume we grew was edamame, we'd raise our prices even more to account for the higher risk and work of managing that large single crop, and people would probably buy less in response. In agriculture, it's never as easy as just increasing production of a popular product the way manufacturing can.Farmstands that sell single (or just a few) specialty items like goat cheese or trout usually have the advantage of that product being something you can do full-time, with the efficiencies of scale of a commercial dairy or a commercial trout-processing facility. It doesn't necessarily work that way for produce, or fruit, or even meat (most of the meat vendors at market have other jobs or incomes; two have told me the profit margin on their meat is 10%-20%, such that they make $4 at most on a $20 meat purchase). Hard to make a living on that margin. So theoretically, yes, we could offer a specialty CSA like you're describing, and see if it allowed more people to take part who didn't want the full range of produce. But because of the inherent risk on growing larger amounts of fewer things, we'd have to charge more, and we'd have to find a lot more customers interested in that kind of CSA because the total income per share would be pretty low, as people will only take so much garlic and edamame per week. The profit margin per item might be better, but the total income would be harder to achieve and far riskier due to the lower diversity on the farm. It's something we've talked about, but I think it raises more problems than it solves. Fundamentally, I come down to the feeling that if in 2012 we can't find 20 or so households among 100,000+ people who are interested in the kind of high-quality, hihg-diversity CSA we'd run, then this whole local foods scene is a mirage. We don't need to please everyone, just a few. At market not even that is happening, so we're trying something else.

  8. Hi Eric,You are describing the 80/20 rule. 80% of your business comes from 20% of your customers. Focus on service to your top 20% customers – fire the rest. You'll be blown away!SKS-ms, llc

  9. What are your thoughts on a market CSA? (customers prepay for market purchases – you get the money, they get a choice throughout the season on what they will buy)Shadowbrook Farm up here in Lincoln uses that model…though I don't know how successful it is for them.Many thanks for your blog – I appreciate your thoroughness in thinking through very complex issues!

  10. Wow! This is a big change. Congratulations on thinking it through and deciding to make the switch. I always appreciate how data-focused you are.You're the third farm I've heard from in the last year about transitioning to an all-CSA or mostly-CSA model. It really does seem to be so much more beneficial to the farmer, plus it seems to be so much less of a pain in the butt compared to market sales.All the best in the season ahead! I hope it works out very, very well for you.

  11. I want to echo Robin's comments. We spend $40-60 a week at the market, but these are mostly to fill in the holes of what wasn't bought at the store, what we want to eat right now, and specialty items. We are going there to buy two or three specific items, typically non-commodity items. So that I don't to make 10 different stops at stands to buy what I want, whoever has the specific item I am looking for also gets my commodity business. It just saves me time. So in your case, if I was looking for edamame, I would buy from you and throw in some tomatoes and what not.I have been a member of 3 different CSAs in Columbia, each for two years or more. In some cases, I felt like I was getting inferior quality (seconds) while the first were sold at market. I also found the quantities to be not what was promised. I understand crops fail, so you are short on something, but then thrown in more on the bumper crop items. And a 20 lb box of produce which consists of 19 lbs of squash and melons isn't what I had in mind. Finally, I found I was paying a lot of money for items I wouldn't have chosen to spend money on. Which was good in a way because I tried a lot of new things, but kolrabi, beets, and swiss chard don't light my fire. Maybe I am not enough of a foodie yet.Finally, when I did find a CSA I liked, family matters made it difficult to make the weekly trip out (not at the market) to pick up the produce.Just thought I would pass these comments along from a Columbia CSAer who has been around the block.

  12. Anon,Thanks for the excellent feedback and thoughts. From our perspective as farmers and consumers, we have found that the Columbia area has a wide range of CSA quality (from excellent to rather poor). I know a number of people who have been turned off by bad CSA experiences, including those you listed. And as an insider, I know of practices by poor CSAs that really annoy me and give an undeserved bad name to CSAs. So I can understand your reluctance if you've run afoul of some of the same issues.I can say that we're structuring our CSA to address some of these issues. For example, we're offering an online form where people can request more or less of many items, so we don't overwhelm people with items they don't want. And we're hoping to do home delivery, to get rid of the hassle of share pickup. The CSA will also be our primary focus, so customers will be getting good quality. You can see some of these details and plans in this more recent post.Certainly, a good CSA will provide a high variety of items, which won't always work for a given household, and that's understandable. I think a CSA run by people who really know how to, and like to, cook can help with this as they're better set up to suggest different ways of preparing items for maximum use of the share, and that's a real strength for us. But yes, CSA works best for people who like a lot of variety and are willing/able to experiment with it.There is so much to consider when both running and choosing a CSA; this is one reason we're trying to get potential customers to come out to the farm so we can discuss and explore these ideas in person, which is more efficient than the long, wordy explanations we have to use online.

  13. Warren,I don't like the market-CSA model, because in effect it's the same as market itself. It doesn't eliminate the uncertainty of what to grow; you have to grow a lot more than what's needed to ensure that everyone gets a fair distribution of product, so that the last few people to the stand don't get cheated with dregs. Thus you're left with a lot of extras that you have to sell, and you really aren't any more stable. It works if you're primarily a market farm anyway and just want to lock in some income, such that you expect to have a lot more than the CSA-intended amounts on your stand. But if you're trying to be primarily a CSA, it's very inefficient and really doesn't solve any of the problems.